Kolin Electronics Co., Inc. vs. Kolin Philippines International, Inc.

A trademark application may be rejected under Section 134 of the IP Code upon a finding that the opposer would be "damaged" by its registration, and any single aspect of damage — whether likelihood of confusion, identity with a trade name, or adverse effect on existing rights — is sufficient to sustain an opposition. The doctrine of stare decisis does not apply when the precedent involves materially different facts or when the precedent's legal framework conflicts with the law in force as interpreted by the Court.

Kolin Electronics Co., Inc. (KECI) and Kolin Philippines International, Inc. (KPII) are entities operating in the electronics industry in the Philippines. KPII is an instrumentality of Taiwan Kolin Corp., Ltd. (TKC), which directly participates in the management, supervision, and control of KPII. The parties and their affiliates had been engaged in multiple prior disputes over the "KOLIN" mark. In the KECI ownership case, KECI was adjudicated the owner of the KOLIN (Class 9) mark under the Trademark Law, covering goods such as automatic voltage regulators, converters, and stereo boosters. In the Taiwan Kolin case, the Court allowed TKC's registration of a differently stylized KOLⁱN mark for "Television and DVD player" products under Class 9, finding no likelihood of confusion with KECI's KOLIN (Class 9). In the en banc Kolin case, decided February 9, 2021, the Court rejected KPII's application for a lowercase kolin mark for "Television and DVD player" under Class 9, established the multifactor test as the standard method for determining likelihood of confusion, abandoned the Holistic Test in favor of the Dominancy Test, and made several significant changes to how confusion is analyzed.

Kolin Electronics Co., Inc. (KECI) is the registered owner of the KOLIN (Class 9) mark under the Trademark Law, covering goods such as automatic voltage regulators, converters, rechargers, stereo boosters, AC-DC regulated power supplies, step-down transformers, and PA amplifiers. KECI's predecessor, Kolin Electronics Industrial Supply, had been using the "KOLIN" mark in the Philippines since February 17, 1989, and was issued certificates of registration of business name by the Department of Trade and Industry. Kolin Philippines International, Inc. (KPII) is an instrumentality of Taiwan Kolin Corp., Ltd. (TKC), which directly participates in KPII's management, supervision, and control. TKC had authorized KPII to register and use the "KOLIN" mark in the Philippines in connection with marketing, selling, and distribution of KOLIN-branded household and home appliances.

On December 27, 2002, KPII filed Trademark Application Serial No. 4-2002-011003 for the mark KOLⁱN under Class 35, covering services described as "For Business of Manufacturing, Importing, Assembling, Selling Products As: Airconditioning Units, Television Sets, Audio/Video Electronic Equipment, Refrigerators, Electric Fans and Other Electronic Equipment or Product of Similar Nature." This filing was made on the same day that TKC filed its own trademark application for KOLⁱN covering Class 11 goods, and also the same day the BLA denied TKC's opposition against KECI's application for KOLIN (Class 9). KECI opposed KPII's application on April 20, 2006, alleging that it would be damaged by the registration because KECI is the owner of the KOLIN (Class 9) mark, confusion is inevitable due to the similarity of the marks and the relatedness of the goods and services, and KPII's filing was in bad faith. KECI also claimed that some of its customers were under the impression that KPII and KECI were one and the same company, such that KECI had received inquiries for KPII products and requests for service or maintenance of KPII appliances, and had been constrained to issue public disclaimers.

KPII responded that its application was for the use and adoption of KOLⁱN as a trade name to identify its business, that KECI's use of KOLIN (Class 9) for goods does not prevent another's adoption of "KOLIN" as a trade name, and that TKC had authorized it to register KOLⁱN in the Philippines. KPII also argued that the KECI ownership case was not conclusive because it concerned only the application for KOLIN (Class 9), not the use of KOLIN as a trade name or for other classes. Pertinently, on May 29, 2007, while the opposition proceedings were pending before the ODG, KECI filed an application for KOLIN (Class 35), covering "For Business of Manufacturing, Importing, Assembling, or Selling Electronic Equipment or Apparatus." This was registered on December 22, 2008, before the ODG issued its decision, though the ODG made no mention of how KECI's KOLIN (Class 35) registration impacted the likelihood of confusion analysis.

The BLA rejected KPII's application on June 29, 2007, finding likelihood of confusion — specifically confusion of business — between KOLⁱN and KOLIN (Class 9), noting that both parties use the identical word "KOLIN" and that the goods and services complement each other. The ODG dismissed KPII's appeal on September 12, 2013, but did not examine the peculiar circumstances alleged by KECI, such as the alleged first use of the KOLIN trade name, the applicability of Section 236 of the IP Code, or the actual confusion among consumers; it simply applied the then-prevailing CA ruling in CA-G.R. SP No. 122565. The CA, on February 16, 2016, granted KPII's Rule 43 petition by wholesale application of the Taiwan Kolin case, which had already been promulgated and which had reversed CA-G.R. SP No. 122565. The CA gave credence to KPII's assertions that its goods are classified as home appliances distinct from KECI's power supply and audio equipment accessories, that they perform distinct functions, and that they are sold through different channels of trade. KECI's motion for reconsideration was denied on August 11, 2016, prompting the instant Rule 45 petition.

• Inapplicability of Taiwan Kolin case: KECI argued that the Taiwan Kolin case is not applicable because the facts therein are different from the facts in the present controversy, involving different marks with different coverage.
• Identity with trade name: KECI maintained that KPII cannot register KOLⁱN for services under Class 35 since it is identical to KECI's trade name, KOLIN ELECTRONICS CO., INC., and that even prior to or without registration, the KOLIN trade name is protected against any unlawful act committed by third parties under Section 165.2 of the IP Code.
• Relatedness of goods and services: KECI argued that the Class 35 services covered by KPII's application for KOLⁱN are closely related to the goods and services covered by KECI's existing registrations for KOLIN (Class 9) and KOLIN (Class 35), and that registration of KOLⁱN is likely to mislead the public.
• Adverse effect on existing rights: KECI claimed that Section 236 of the IP Code prohibits the registration of KOLⁱN because it would adversely affect KECI's rights in the KOLIN (Class 9) mark acquired in good faith under the Trademark Law.

• Stare decisis: KPII argued that the CA did not err in applying the Taiwan Kolin case based on the doctrine of stare decisis, since the same questions relating to the same event had been put forward by parties similarly situated as in the previous case.
• Non-relatedness of goods: KPII insisted that the goods to which its application relates are not closely related to KECI's goods in KOLIN (Class 9), being home appliances as opposed to power supply and audio equipment accessories.
• Bar on trade name argument: KPII contended that KECI is barred from arguing that KPII's trademark may not be registered on account of its being identical to KECI's trade name, because matters relating to the relatedness of goods, confusing similarity of marks, and the non-bar effect of KECI's Class 9 registration had allegedly been ruled with finality in the Taiwan Kolin case.

• Stare Decisis: Whether the principle of stare decisis finds application in the present case such that the ruling in the Taiwan Kolin case should be applied wholesale.
• Damage to KECI: Whether KECI will be damaged by KPII's registration of KOLⁱN, considering the multiple aspects of damage alleged by KECI.

• Stare Decisis: No. The doctrine of stare decisis is inapplicable because the present controversy involves different marks with different coverage, and the Taiwan Kolin case's method of determining likelihood of confusion conflicts with the law in force as interpreted by the Court in the en banc Kolin case.
• Damage to KECI: Yes. All four aspects of damage alleged by KECI are meritorious: (1) likelihood of confusion between KOLⁱN and KOLIN (Class 9); (2) likelihood of confusion between KOLⁱN and KOLIN (Class 35), which is presumed under the 2020 Revised Rules because an identical mark is used for identical services; (3) KOLⁱN is identical to KECI's trade name, which is protected even without registration under Section 165.2 of the IP Code; and (4) the registration of KOLⁱN would adversely affect KECI's rights in the KOLIN (Class 9) mark acquired in good faith under the Trademark Law, pursuant to Section 236 of the IP Code.

• Stare Decisis: The doctrine of stare decisis et non quieta movere requires adherence to precedents where facts are substantially the same. However, the Taiwan Kolin case involved a comparison between KOLIN (Class 9) and a differently stylized KOLⁱN mark covering "Television and DVD player" products, whereas the present controversy involves KOLIN (Class 9), KOLIN (Class 35), and KPII's KOLⁱN application covering Class 35 services for the business of manufacturing, importing, assembling, and selling various electronic products. The coverage of the marks is very different, and KECI's KOLIN (Class 35) registration — a distinct aspect of damage — was neither present nor considered in the Taiwan Kolin case. Moreover, the Taiwan Kolin case used the Holistic Test in evaluating trademark resemblance, which the en banc Kolin case abandoned in favor of the Dominancy Test. Since stare decisis does not and should not apply when there is conflict between the precedent and the law, the Taiwan Kolin case's pronouncements on likelihood of confusion cannot be applied wholesale here. The Court clarified that stare decisis may still apply in trademark disputes insofar as specific findings (e.g., relatedness of particular goods) are concerned, but not as to the whole conclusion on the existence or non-existence of likelihood of confusion, since other factors and circumstances peculiar to each case must still be considered.

• Damage to KECI: Section 134 of the IP Code broadly uses the word "damage" as a justifiable basis for rejecting an application, and any single aspect of damage is sufficient to sustain an opposition. The Court found all four aspects of damage alleged by KECI to be meritorious.

  As to the first aspect — likelihood of confusion between KOLⁱN and KOLIN (Class 9) — the Court applied the multifactor test established in the Rules of Procedure for Intellectual Property Rights Cases and reinforced in the en banc Kolin case. Under the Dominancy Test, the marks are identical visually, phonetically, and connotatively because both feature only the word "KOLIN"; since KOLIN (Class 9) is a word mark, KPII's stylized lettering does not distinguish it. The finding of non-resemblance in the Taiwan Kolin case cannot apply because that finding resulted from comparing KOLIN (Class 9) with a different stylization of KOLⁱN, not the KOLⁱN mark at issue here. As to relatedness, the Court applied the jurisprudential factors enumerated in the en banc Kolin case and found that KOLIN (Class 9) goods ("Automatic Voltage Regulator, Converter, Recharger, Stereo Booster, AC-DC Regulated Power Supply, Step-Down Transformer, PA Amplifier AC-DC") are legally related to at least one good involved in or associated with KOLⁱN-branded services, namely "Television Sets," because the goods are electronic in nature, relatively expensive, rarely bought, serve entertainment purposes, and flow through the same channels of trade. Complementarity was also established: KPII itself admitted that the goods "complement each other." The sophistication of buyers did not negate confusion because consumers who infrequently purchase electronic goods would likely not know that differently stylized "KOLIN" brands come from different companies. The strength of KECI's mark — a fanciful or coined mark — is highly distinctive, making confusion likely if another entity concurrently uses it. Bad faith was established because KPII is an instrumentality of TKC, was authorized by TKC to use the mark, filed its application on the same day TKC filed its own application and the BLA denied TKC's opposition, and it was highly improbable that KPII did not know of KECI's existing KOLIN registration given that both are in the same line of business.

  As to the second aspect — likelihood of confusion between KOLⁱN and KOLIN (Class 35) — the Court applied the presumption under Section 4 of the 2020 Revised Rules, which states that likelihood of confusion shall be presumed when an identical sign or mark is used for identical goods or services. Since KOLIN (Class 35) and KOLⁱN are identical marks, and both cover the "Business of Manufacturing, Importing, Assembling, or Selling Electronic Equipment," likelihood of confusion was presumed.

  As to the third aspect — identity with KECI's trade name — the Court held that trade names need not be registered with the IPO to be protected under Section 165.2 of the IP Code, which provides that trade names shall be protected, even prior to or without registration, against any unlawful act including any subsequent use by a third party likely to mislead the public. Since KECI's predecessor was the first user of "KOLIN" as part of its trade name since 1989, and KPII's KOLⁱN features the first word in KECI's trade name, confusion is likely. The Taiwan Kolin case made no pronouncement concerning trade names, so stare decisis cannot bar KECI from raising this issue.

  As to the fourth aspect — adverse effect on KECI's Trademark Law registration — Section 236 of the IP Code provides that nothing in the IP Code shall adversely affect rights in marks acquired in good faith prior to the effective date of the law. Since KECI was declared the owner of KOLIN (Class 9) under the Trademark Law, granting KPII's registration would effectively curtail KECI's right to freely use and enforce the KOLIN word mark for its own range of goods and services. Pursuant to Section 122 vis-à-vis Section 236, the Court cannot give due course to KPII's application.

• Stare decisis et non quieta movere — The doctrine requires adherence to precedents and application of established principles to all future cases where facts are substantially the same, regardless of whether the parties and property are the same. It is based upon the legal principle or rule involved, not upon the judgment, and in this sense differs from res judicata. The doctrine does not apply when the precedent involves materially different facts or when the precedent conflicts with the law in force as interpreted by the Court. In trademark disputes, stare decisis may apply insofar as specific findings (e.g., relatedness of particular goods) are concerned, but not as to the whole conclusion on likelihood of confusion, since other factors peculiar to each case must still be considered.

• Multifactor test for likelihood of confusion — The standard method for determining likelihood of confusion, as set forth in the Rules of Procedure for Intellectual Property Rights Cases and reinforced in the en banc Kolin case. The factors are: (a) the strength of the plaintiff's mark; (b) the degree of similarity between the plaintiff's and the defendant's marks; (c) the proximity of the products or services; (d) the likelihood that the plaintiff will bridge the gap; (e) evidence of actual confusion; (f) the defendant's good faith in adopting the mark; (g) the quality of the defendant's product or service; and (h) the sophistication of the buyers. Out of these, resemblance of marks and relatedness of goods or services are uniformly deemed significant. The test applies to both confusion of goods and confusion of business.

• Dominancy Test — The prevailing test for determining trademark resemblance, which focuses on the prevalent features of competing marks, considering the appearance, sound, meaning, and overall impressions of the competing marks. The Holistic Test was abandoned. For word marks, the words themselves are the subject of protection, and the depiction is not limited to any particular style; if one mark is a plain word mark, the focus is on the word used regardless of stylization.

• Relatedness of goods/services — jurisprudential factors — The factors for determining relatedness are: (a) the business (and its location) to which the goods belong; (b) the class of product to which the goods belong; (c) the product's quality, quantity, or size, including the nature of the package, wrapper or container; (d) the nature and cost of the articles; (e) the descriptive properties, physical attributes or essential characteristics with reference to their form, composition, texture or quality; (f) the purpose of the goods; (g) whether the article is bought for immediate consumption; (h) the fields of manufacture; (i) the conditions under which the article is usually purchased; and (j) the channels of trade through which the goods flow. Product or service classification has been removed as a factor. Complementarity of the goods or services is also a basis for finding relatedness.

• Protection of trade names without registration — Under Section 165.2 of the IP Code, trade names are protected, even prior to or without registration with the IPO, against any unlawful act committed by third parties, including any subsequent use of the trade name by a third party, whether as a trade name or a mark, likely to mislead the public. This dispensed with the registration requirement that existed under the Trademark Law.

• Preservation of existing rights — Under Section 236 of the IP Code, nothing in the IP Code shall adversely affect the rights or enforcement of rights in marks acquired in good faith prior to the effective date of the law. A registration under the IP Code that would curtail the right to freely use and enforce a mark acquired under the prior Trademark Law cannot be granted.

• Presumption of likelihood of confusion for identical marks and identical goods/services — Under Section 4 of the 2020 Revised Rules of Procedure for Intellectual Property Rights Cases, likelihood of confusion shall be presumed in case an identical sign or mark is used for identical goods or services.

• Bad faith in trademark applications — Bad faith or fraud is intentionally making false claims to take advantage of another's goodwill, causing damage or prejudice. One can have a registration in bad faith only if he applied for registration despite knowing that someone else has created, used, or registered that mark. If the circumstances would lead a reasonable mind to conclude that the applicant knew about the opposer's mark when the application was made, there is bad faith.

• "The principle of stare decisis does not mean blind adherence to precedents. The doctrine or rule laid down, which has been followed for years, no matter how sound it may be, if found to be contrary to law, must be abandoned. The principle of stare decisis does not and should not apply when there is conflict between the precedent and the law. The duty of this Court is to forsake and abandon any doctrine or rule found to be in violation of the law in force." — This passage articulates the exception to stare decisis where a precedent conflicts with the law in force, providing the basis for refusing to apply the Taiwan Kolin case wholesale.

• "The provision broadly uses the word 'damage' as a justifiable basis for rejecting an application or as ground for an opposition. Thus, in opposition cases, opposers may allege any and all aspects of damage and these will form the framework for determining whether the application should be rejected. To be sure, any single aspect of damage, (e.g., the existence of likelihood of confusion) would already be sufficient basis to reject an application." — This passage defines the scope of Section 134 of the IP Code and establishes that any single meritorious aspect of damage suffices to reject a trademark application.

• "While it is true that KPII possesses the authorization of the owner of KOLⁱN for 'Television and DVD player', this does not mean that KPII can claim exclusivity over the KOLⁱN mark for all other goods/services, regardless of damage to other entities." — This passage clarifies that authorization from a mark owner to use a mark for specific goods does not confer blanket authority to register the same mark for different goods or services without regard to damage caused to other parties.

• "Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against the owner of an infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the Philippines." — This passage states the rule that trade name protection arises from use in trade or commerce, not from registration, as codified under Section 165.2 of the IP Code.

• Kolin Electronics Co., Inc. vs. Kolin Philippines International, Inc., G.R. No. 228165, February 9, 2021 (en banc Kolin case) — Controlling precedent. The Court relied heavily on this case for the multifactor test, the Dominancy Test, the factors for relatedness of goods/services, the finding that KOLIN is a fanciful or coined mark, the finding that KPII is an instrumentality of TKC, the finding of KPII's bad faith, the discussion on Section 236 of the IP Code, and the relatedness between KOLIN (Class 9) goods and "Television and DVD player" products.

• Taiwan Kolin Corp., Ltd. vs. Kolin Electronics Co., Inc., G.R. No. 209843, March 25, 2015 (Taiwan Kolin case) — Distinguished and refused application as stare decisis. The Court found that this case involved different marks with different coverage, used the abandoned Holistic Test, and made no pronouncement on trade names. Its finding of non-resemblance resulted from comparing KOLIN (Class 9) with a different stylization of KOLⁱN, not the KOLⁱN mark at issue in the present case.

• Tan Chong vs. Secretary of Labor, 79 Phil. 249 (1947) — Followed for the principle that stare decisis does not apply when there is conflict between the precedent and the law, and that the Court's duty is to forsake and abandon any doctrine or rule found to be in violation of the law in force.

• Mang Inasal Philippines, Inc. vs. IFP Manufacturing Corporation, G.R. No. 221717, June 19, 2017 — Followed for the principle that goods (inasal-flavored curl snack products) can be closely related to services (restaurant services) when the underlying goods and services deal with the same subject matter, illustrating confusion of business.

• Coffee Partners, Inc. vs. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, March 3, 2010 — Followed for the doctrine that trade names need not be registered with the IPO before protection is available, and for the elements of trade name infringement under the IP Code.

• Zuneca Pharmaceutical vs. Natrapharm, Inc., G.R. No. 211850, September 8, 2020 — Followed for the definition of bad faith in trademark registrations: one can have a registration in bad faith only if he applied for registration despite knowing that someone else has created, used, or registered that mark.

• Chinese Young Men's Christian Association of the Philippine Islands vs. Remington Steel Corporation, G.R. No. 159422, March 28, 2008 — Cited for the definition and policy basis of the doctrine of stare decisis et non quieta movere.

• Section 134, IP Code (R.A. No. 8293) — Governs opposition to trademark applications. Provides that any person who believes he would be "damaged" by the registration of a mark may file an opposition. The Court interpreted "damage" broadly, holding that opposers may allege any and all aspects of damage, and any single meritorious aspect suffices to reject an application.

• Section 123.1(d), IP Code — Provides that a mark cannot be registered if it is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or priority date, in respect of the same goods or services, closely related goods or services, or if it nearly resembles such a mark as to be likely to deceive or cause confusion. Applied to the first aspect of damage (likelihood of confusion between KOLⁱN and KOLIN (Class 9)).

• Section 122, IP Code — Provides that rights in a mark are acquired through registration made validly in accordance with the IP Code. Read together with Section 236 to hold that a registration under the IP Code cannot adversely affect rights acquired in good faith under the prior Trademark Law.

• Section 165.2, IP Code — Provides that trade names shall be protected, even prior to or without registration with the IPO, against any unlawful act committed by third parties, including any subsequent use of the trade name by a third party, whether as a trade name or a mark, likely to mislead the public. Applied to the third aspect of damage (identity of KOLⁱN with KECI's trade name).

• Section 236, IP Code — Provides that nothing in the IP Code shall adversely affect the rights or enforcement of rights in marks acquired in good faith prior to the effective date of the law. Applied to the fourth aspect of damage (adverse effect on KECI's Trademark Law registration for KOLIN (Class 9)).

• Rule 18, Section 4, 2011 and 2020 Revised Rules of Procedure for Intellectual Property Rights Cases (A.M. No. 10-3-10-SC) — Sets forth the multifactor test for determining likelihood of confusion between marks used on non-identical goods or services, and the presumption of likelihood of confusion when an identical sign or mark is used for identical goods or services. The Court applied the multifactor test as the standard method for determining likelihood of confusion and applied the presumption to the second aspect of damage (KOLIN (Class 35) vs. KOLⁱN).

Gesmundo, C.J. (Chairperson), Hernando, Carandang, and Zalameda, JJ., concurred.